Becoming a landlord isn’t for the faint at heart or the timid. There are pluses and minuses to becoming a landlord. While it’s true that it’s a great way to add income to your bottom line, you also have to be pretty responsible. You’re opening a second home to people that you really don’t know, and forming a business deal with them of sorts. In exchange for money, they will have full reign of your property until the day that they move out. Then you have to make the place ready for the next person, which is going to take some time.
There are a few things that you need to keep in mind if you’re going to become a landlord and stay one for the long term.
1. Background check everyone
We’re firm believers in giving everyone a chance, but that doesn’t mean that we have the space to be reckless. It’s important that you interview all applicants thoroughly. This includes a credit and background check. Now some people feel that this is an invasion of privacy but they are going to be renting your property. That’s something that requires a high degree of trust. Make sure that you background check people appropriately before you make the big decision to take them on as a tenant.
Don’t be afraid to call their references. Some people put down false information because they think that you won’t call them out on it. But they couldn’t be any more wrong: you absolutely will call them out on it, and that means that they won’t get into the property. Routinely check to make sure that they really do have the income to afford the place. Even if they’re self-employed, they will have tax records to back up what they make.
2. Deposit their money properly
You need to read up on all of the rules behind being a landlord, because there are plenty of them. You may be on the hook for a lot of money if you’re not willing to follow the law to the letter. For example, it’s illegal not to put a tenant’s deposit into a DPS, otherwise known as a Deposit Protection Scheme. They will get a little interest on their deposit, and you’ll be able to honestly say that you did the right thing from the beginning.
3. Set the terms of the agreement early
A solid tenancy agreement outlines what they’re responsible for and what you’re responsible for. Sometimes old school landlords will try to just go on the honor system, but this isn’t a good idea at all. It actually makes a lot more sense to try to get things in writing. If things go badly, you’ll need as much documentation as you can.
Most tenants are pretty good about following the rules that you set. For example, do you want to limit pets? You need to put that into the agreement. Do you want to require that lawn care be done to the property? You need to make that clear in the contracts signed. Once those are signed, you have an agreement and you can move forward.
4. Be flexible without becoming a doormat
If you’re going to be flexible, there’s nothing wrong with that. If a tenant calls you with a problem, it’s important to try to fix it. But there comes a time when you can’t be flexible and you really do have to start putting your foot down. That’s where the tenancy agreement comes into play. If tenants are trying to get away with something that isn’t right, you need to call them out on that behavior. Be sure that you leave a written trail of communication, because you will need it if you have to go to court.
Flexibility means that you help them a little, but you also need to have some boundaries. Make it clear when it’s appropriate to contact you, and when they may have to wait till the next day. You’re their landlord, but unless it’s an emergency…well, you have a life to lead as well. Sometimes tenants believe that they own all of your time simply because they pay rent, but that’s not the case.
5. Go the extra mile for the good ones
Everyone likes getting treatment that others aren’t receiving at the time. As long as you’re doing everything you can to make sure that you have treated the tenant with respect, that’s all you can do. But if you’re taking the time to take care of them, they’re going to make sure that they’re good to you as well. This is usually in the form of them fixing things without having to call you, and also in the form of leaving a clean space when they’ve decided to move on to their next adventure.
Making a tenant feel welcome will encourage them to refer other good tenants to you. Finding a good tenant is worth its weight in goal, and shouldn’t be overlooked. But by the same token, remember that people are looking at you in the same light. They want to make sure that you’re a good landlord who will take care of them and their needs.
Overall, it’s up to you to decide if a rental property is really the best way to go. If you can get the financing for an investment property, it’s a long term way to grow your money and also help provide great housing to people that are willing to pay you fairly for the experience. Check it out today!